The world is embracing the efficiency and ease of cashless transactions, as the blockchain continues to grow. But the advanced tech may come at a high price.

Researcher Camilo Mora and his colleagues argue that even though Bitcoin is responsible for less than 1% of cashless transactions, it has left behind a large carbon footprint behind.

“Our analysis suggests that if its rate of adoption follows broadly used technologies, it could create an electricity demand capable of producing enough emissions to exceed 2° Celsius in just a few decades.”

2° may seem slight, but the effect on food production, ocean levels and human survivability would be drastic. Drought and flood will ruin crops. The sea will acidify, and thousands of coastal cities rendered uninhabitable.

Initial reaction to the study is mixed — some condemn it as mainstream media hysteria, while others feel vindicated in their dislike of bitcoin. On Twitter, the debate is raging and many members of the crypto community vented their frustrations.

Waiting for the story about how energy used for banking, debit/credit card processing, fiat currency production, gold mining/refining could "break the climate". pic.twitter.com/Z6z4kq96ru

How Accurate are the Results?

Northwestern University’s Eric Masanet doubts that the study’s results are accurate. The energy modelling professor took aim at the study’s predictions, calling them “fundamentally flawed.”

“We know that the global electric power sector is decarbonising and that information technologies, including cryptocurrency mining rigs, are become much more energy efficient. It appears the authors have overlooked these two latter trends.”

There are concerns that it’s not possible to accurately predict how efficient Bitcoin mining may become. Critics point to a poor research method. To better understand this view, Bitcoin Australia unpacks the methodology below.

The researchers compiled a list of hardware currently used for Bitcoin, and noted their respective energy efficiencies.

Random hardware was then selected for each block mined, and the number of hashes required to solve the block multiplied by the energy efficiency of the random hardware. This equals the amount of electricity consumed to solve the given block.

With this in mind, the researchers gathered data about the mining companies:
Country of operation;
Fuel use in the country;
Average CO2 emissions in the country.
As a result, this data estimates the total carbon emission to produce electricity in the country of operation.

By multiplying the electricity consumption per block by the electricity emissions in the country where it was mined, the researchers estimate the total CO2 emissions for every block in 2017.

The study also assumes that Bitcoin will become the main currency transacted world-wide. While total adoption of the technology is the ultimate goal for some wallet holders, it’s more likely crypto currencies will remain primarily investments.

Not All Bad News

However, the study was not entirely disparaging. Mora and his colleagues also presented recommendations to keep Bitcoin energy-efficient and eco-friendly.

Emissions reduction cannot depend on yet-to-be-developed hardware. Instead, the researchers say that “simple modifications to the overall system, such as adding more transactions per block or reducing the difficulty or time required to resolve the proof-of-work,” should be the focus.

These changes will cause an immediate electricity reduction in Bitcoin mining and trading.

“[The] computing verification process is likely to migrate to places where electricity is cheaper, suggesting that electricity decarbonisation could help to mitigate Bitcoin’s carbon footprint.”

At the end of the day, Bitcoin is here to stay. And despite methodology errors, this study raises the importance of sustainability in the Bitcoin community.

It remains to be seen how Bitcoin mining hardware and trading methods will evolve to reduce energy consumption. But with economic incentive to do so, it’s inevitable.

In the meantime, to keep up with the latest bitcoin news and headlines subscribe to Bitcoin Australia’s weekly newsletter here.

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